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Originally Posted by neeha
The point about our retail sector (worth $180 bn) and Walmart's Sales is invalid
Well Vinit this point is not senseless. May be I didn’t explained it in proper context. So let me do it now..
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No I didnt mention that the point is senseless. But the argument of a co. by its sheer size would/should hamper our economy--retail model in specific, is a misplaced argument. Unless policy issues are not in place. I'll further elucidate. Read as you wish.
You had mentioned and I quote "Our total retail sector is worth $180bn where as the sales of WAL MART this year is $315.654bn. So do you think we are in position to compete with them"
Yes, the Walmarts with their might would exercise a better bargaining power like you mentioned. But here again what I am contesting is that taking the annual sales of Walmart which procures in large amounts from China, the cost of which again on a PPP basis would be much lower and the sales of which would be much higher on a PPP basis in the U.S. and not neccessarily in terms of the actual value of goods, which means that the revenues would be inflated. Hope I tried to get the specific point
With all their might Walmart would have to sell at prices prevailing here and adjust costs/revenue structures to what's best suited here.
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Originally Posted by neeha
Recently you might have seen Pantaloons publicly feuding with FMCGs for a five percent margin.On CNBC I watched DAMODAR MALL: President-Food Business Division, Pantaloons saying that if FMCGS will not give them the margin then they will remove there products from the shelves of PRIL(Pantaloon Retail India Limited). Where as on the same program An executive from HLL said that there demand is RIDICULOUS, they can’t dictate terms like WAL MART because the sale through formated retail of India accounts for only 1-2% of total sales by FMCGs. So by depicting the annual revenues of Wal Mart I just want to point out their bargaining power*********************NEEHA.
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Its a business decision. Prices, procurement,sales, whatever......
Dont thin we should read much into it with respect to the argument of Retail. Do we know all the exact contours of the deal/arrangement? The Futures group(owners of Pantaloon) is the biggest and most well-spread retailer unlike let's say Trent or Shoppers Stop owned by the Raheja's.
Another quote "So its better if we give our domestic players like Pantaloons, Shoppers Stop etc. a chance to develop and capture more part of the sector so that they can have a better chance to compete"
Why,
Instead of giving the specific players you mentioned, a chance to compete the more appropriate argument is give retailers a fair chance to compete. Period. Irrespective of foren on desi.
Remeber the swadeshi arguments about Dont let the Phoren Players to enter our markets
as Domestic Industry would perish.
Cause the Japanese would bring their machines (capital intensive processes) and the Americans would bring their computers(Technology) and since our economy till then was labour driven, so we would lose jobs and people would lose a source of income.
Remeber arguments of -dont bring the Pvt sector in agriculture as millions of farmers would be displaced cause they would be rendered ineffective. But ironically Dairy and food processing and cold storage and areas that are left untouched which is where a lot of Pvt players see an opportunity.
To put it in terms of the lay person,
Werent we told that the GM's , the IBM's and Honda's of the world would capture our market and it would be the begining of Imperialism. Has it happened?
Do you think we would have had a Pulsar, Ranbaxy , indica if it werent for compt.? Have the Infosys,Wipro, TCS perished under the onslaught of the IBM's and the Microsoft's?
Infosys Chairman, NRN has gone on record saying that the IBM's of the world only made them stronger. So we have a Pulsar which is sold in other BRIC economies, a scorpio which is sold in Mexico, a Indica which is sold in the UK, albeit under the Rover brand.
I hope you get my point which is the that we mention the same arguments against FDI in retail.
My point is simple
Look at the Walmarts as a huge source of Exports like the Chinese have.
Retailers source 60$ bln in terms of goods from China.
Get them to invest in areas that have been left untouched. They would bring their proccess/practices and use it to you advantge. It would keep the domestic players in check.
There is no denying the FDI in retail is good. But the retails sector and how it benefits the mass at large is a function of good policy. The retail sector would go for a toss even if FDI wasnt allowed. Then how beneficial it ends up being is a Function of a good policy irrespective of FDI or not.
Phew
Vineet
ps. Another link with good info
http://www.atimes.com/atimes/South_Asia/HC11Df02.html
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